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CAFC Judge Pauline Newman Questions Constitutionality of PTO Reexam of Obviousness Issue ‘We Finally Adjudicated Eleven Years Ago’

December 8, 2011

Dissenting in a panel decision affirming a Patent and Trademark Office reexamination which found a machine for sifting rocks and debris obvious based on the prior art, Judge Pauline Newman argued that the reexamination was unconstitutional because it allows an administration agency to relitigate the same issue that “we finally adjudicated eleven years ago”  (In re Construction Equipment Co., Fed. Cir., No. 2010-1507, 12/8/11).

Reexamination Obviousness Ruling for Rubble Screen Assembly Affirmed.

Here, Construction Equipment Company appealed the PTO’s reexamination which rejected its claims in a patent (5,234,564) directed to a “Mobile Screen Assembly for Rubble and Debris” for sifting rocks, soil, plant matter, and other materials based on size. Agreeing with the Board of Patent Appeals and Interferences’s finding that the asserted claims were obvious under Section 103 of the Patent Act, 35 U.S.C. § 103, Judge Sharon Prost of the Federal Circuit wrote:

Reviewing the record prior art, we agree with the Board that every limitation of each claim on appeal is found in one or another of the available references. We further agree one of ordinary skill in the art would have been able to combine the available references in such a way as to practice the alleged invention of each claim. And we agree that such a person would have had a reason to make such combinations, for the reasons set forth by the Board and by the Examiner.

As CEC itself admits, the basic concepts of sifting and sorting material are not new. Neither are the concepts of carrying material via conveyors, or of positioning the sorting machine on a trailer, as the ’564 patent does. CEC’s alleged invention consists entirely of combining known elements into a machine that, while possibly new, was nevertheless obvious and therefore unpatentable. We find the Board’s opinion supported by substantial evidence and without legal error. The opinion of the Board therefore stands affirmed.

The opinion was joined by Judge Kathleen O’Malley.

Newman in Dissent: PTO Reexam on Same Issue After Final Adjudication Is Unconstitutional.

As to the merits of this decision, Newman argued that her colleagues inappropriately used “judicial hindsight to construct a machine that was not previously known, a machine that achieved commercial success because it provided previously unavailable advantages.” In a footnote, she explained that the invention in the ‘564 patent channels oversized materials in a novel way by allowing a relatively small machine to process larger debris than its predecessors, while simultaneously sifting and sorting. This machine is also described in the patent as reducing jamming and improving performance compared with prior art machines, and as having the capacity to handle large debris and being small enough to be transported to a work site on roads using a hitch, she noted. “Its commercial value attracted imitators, and litigation,” Newman said. Quoting In re Fritch, 972 F.2d 1260 (Fed. Cir. 1992), she said that “it is impermissible to use the claimed invention as an instruction manual or ‘template’ to piece together the teachings of the prior art so that the claimed invention is rendered obvious.”  Then quoting the Supreme Court’s ruling in KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007), she pointed out that the majority failed to provide any “articulation of a rational underpinning” for combining the references in this way to achieve the machine made by the patentee.

However, Newman was more troubled that this reexamination appeal “raises a fundamental question—is a final adjudication, after trial and decision in the district court, and appeal and final judgment in the Federal Circuit, truly final?” She said that the PTO here failed to mention “the prior adjudication of the same issue, although that issue was finally decided in the courts in 2001. The PTO’s reexamination decision is now before us on appeal, the same issue that we finally adjudicated eleven years ago.” Newman noted that the district court found the ’564 patent valid, enforceable, and willfully infringed by Powerscreen, and entered final judgment. That judgment rejecting Powerscreen’s obviousness arguments was affirmed by this court, Newman continued, citing Constr. Equip. Co. v. Powerscreen Int’l Distrib. Ltd., 243 F.3d 559 (Fed. Cir. 2000), cert. denied, 531 U.S. 1148 (2001).

Newman said that the majority here “simply defers to the agency’s new result as if this history does not exist.” For Newman, this case raises serious constitutional questions that go directly to the power of federal courts under Article III, §1. Though Prost had stated in a footnote that the parties did not raise the constitutionality of this reexamination at the PTO proceeding, Newman insisted that “the nation’s fundamental law is not waivable.” Quoting authority, she stressed that the judicial power established in the Constitution is “an inseparable element of the constitutional system of checks and balances.” N. Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982).

Newman continued:

The constitutional impact of the procedure that gives rise to this appeal cannot be deemed waived, for it affects no less than the integrity of judgments and the separation of powers. Constitutional principles are not required to be set aside merely because they were not raised in the administrative forum. See Hormel v. Helvering, 312 U.S. 552, 555–59 (1941) (courts of appeal have the discretion to consider issues not to consider issues not raised below “as justice may require”).

The plan of the Constitution places the judicial power in the courts, whose judgments are not thereafter subject to revision or rejection. Neither the legislative nor the executive branch has the authority to revise judicial determinations. See Chi. & S. Airlines, Inc. v. Waterman S.S. Corp., 333 U.S. 103, 114 (1948) (“Judgments, within the powers vested in courts by the Judiciary Article of the Constitution, may not lawfully be revised, overturned or refused faith and credit by another Department of Government.”); Gordon v. U.S., 69 U.S. 561, 561 (1864) (judgments of Article III courts are “final and conclusive upon the rights of the parties”). In Plaut v. Spendthrift Farm, Inc., 514 U.S. 211 (1995), the Court explained that:

The record of history shows that the Framers crafted this charter of the judicial department with an expressed understanding that it gives the Federal Judiciary the power, not merely to rule on cases, but to decide them, subject to review only by superior courts in the Article III hierarchy—with an understanding, in short, that “a judgment conclusively resolves the case” because “a ‘Judicial Power’ is one to render dispositive judgments.”

Id. at 218–19 (quoting Frank H. Easterbrook, Presidential Review, 40 Case W. Res. L. Rev. 905, 926 (1990)). The Court traced the history of judicial finality to Hayburn’s Case, 2 U.S. (2 Dall.) 409 (1792), which “stands for the principle that Congress cannot vest review of the decisions of Article III courts in officials of the Executive Branch.” Plaut, 514 U.S. at 218.

With the emergence of the administrative state, “Article III, §1 safeguards the role of the Judicial Branch in our tripartite system by barring congressional attempts ‘to transfer jurisdiction [to non-Article III tribunals] for the purpose of emasculating’ constitutional courts, and thereby preventing ‘the encroachment or aggrandizement of one branch at the expense of the other.’” Schor, 478 U.S. at 850 (brackets in original, internal citations omitted). The application of this rule is not in dispute, nor is it disputed that administrative agencies may be authorized to perform quasi-adjudicatory functions. Id. The issue here arises because the judicial function has already been performed, and warrants the finality of the Judicial Power. As the court explained in Town of Deerfield v. Federal Communications Commission, 992 F.2d 420, 428 (2d Cir. 1993), revision by the agency of the district court’s order would render the previous judgment by the district court “merely advisory” and thus in violation of the Constitution.

Construction Equipment Co. was represented by Peter E. Heuser of Schwabe Williamson & Wyatt, Portland, Ore. Associate Solicitor Frances M. Lynch represented the PTO, Alexandria, Va.


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